by | Jun 1, 2023

Who has the rainbow now? In my article in February, I stated that the average SAFFA household is under immense pressure. It has only worsened, the “middle-class” has debt and the debt is now catching up with us in this high interest rate environment. CV-19 has left a trail of destruction behind it and international cost of living is spiraling out of control, call it the “Russia-Ukraine-gate”. The pot-o-gold seems illusive.

The president and allies have not helped our cause with the most recent political shenanigans. The poorer amongst us have gotten poorer and the wealthy, well if they have applied good financial planning principles, have seen some good above inflationary returns over the past couple of years. They have “beaten the bank”.

Let’s take the chicken and not the egg:

The chicken is being eaten. The poor cannot save, the middle class seems to be saving less. The few employment market entrants are learning about saving early in life, as they watch their parents shift retirement plans from the 60’s to the 70’s. They also have an array of more cost effective and efficient investment options: Tax Free Investments, an array of unit trust funds with much offshore exposure, local and offshore Endowments and Retirement annuities without the high fees associated to the industry in years before.

What is your action plan?

Entrants to the workforce: Have a goal, be disciplined, diversify your investments from the word go. Regularly review your spending patterns and be prudent in your saving.

  • Aim to save at least 10% of your income for long term savings/ forget money. We have clients that are studying full-time and investing some of their bursary money for a rainy day.

Above that: always have a 1-2 year and 3-6 year plan/ objective. Put aside “envelopes” of money towards an emergency fund and also a portion towards a dream fund (house deposit, car purchase). Save in principle, even if it is a couple of hundred rand it is a certain way to invest in your future self.

Retired and the budget does not work out ? Re-engineer yourself. Get involved in your local community, look for a part time job, find a hobby that can sell online. Tutor kids in your neighbourhood, they need all the help they can get. Apparently 78% of our Gr.4’s cannot read in any language.

VANGUARD suggests Four Simple Investment principles: